I wanted to spend less and pay down my debt. But at the same time, I also wanted to enjoy life and be happy.

I decided to look over my credit card statements to figure out where my money was going. This is when I had a HUGE realization.

I was spending tons of money on things I didn’t care about.

So I made a change. I decided to spend money on the few things I knew made me happy, and cut back on the many things I wasn’t sure about.

And you know what? My savings SKYROCKETED! And as a bonus, I was even happier than before.

As it turned out, most of the things I spent money on didn’t make my life any more enjoyable, so cutting them was easy. As long as I continued to spend money on the things that made me happy, I could enjoy life and save money.

Over the coming months, I continued to implement this method until I paid off all my debt.

When you figure out the expenses in your life that matter, you can cut out the ones that don’t.

You may find that out of all the things you spend money on, only a few are really important for you to be happy and enjoy life. Once you cut out all that unnecessary spending, you could save hundreds or thousands of dollars each month, and be just as happy as before!

Of course, this is easier said than done.

It’s easy to mistake “wants” for “needs.” Maybe you think you need your cable TV even though you rarely watch it. Or maybe you think you’re a happier person going out for dinner a few nights a week even though you’d really be just as happy eating at home. Or maybe you feel that you need to start your day with a caffeine-infused beverage from Starbucks every morning even though you’d actually be fine with a home-brewed cup of joe.

So while you WANT to save money, you keep spending on things because you think you need them to be happy.

In some cases you may be right. But with others, you could be dead wrong.

Unfortunately, if you never figure out which expenses TRULY matter to you and align your spending accordingly, you’ll never know if your hard earned dollars are going to happiness-inducing, life-affirming purchases… or if you’re just throwing your money out the window.

At this point you might be wondering, why not cut back on ALL spending to save even more money?

And to that I say, do you really think you’ll be able to stick to your debt-payoff plan if you’re not having any fun and you hate life?

No. You need to have a fun budget and enjoy life in order to make it to the debt freedom finish line. And by spending money on just a few really important things (and eliminating or reducing everything else), you’ll enjoy life and save money at the same time.

What if you could save more money by spending on things that truly matter to you?

Wouldn’t it feel good to save more money each month? To have more more money available to put towards debt?

And to do all that while still enjoying life and spending on the things you care about?
Enter the prioritized spending plan.

This is REALLY simple. (It’s actually inspired by the well known 80/20 rule, and it’s great for saving for several reasons.)

The goal here is to figure out which expenses are important for you to enjoy life, spend money on them, and then cut costs in a big way on everything else.

Here’s how you start. Get out a sheet of paper and write down all the expenses you can think of. Try to get down everything you spend money on regularly. Rent, your phone bill, internet, food, etc.

Next, we’re going to rank this list. Put a number next to each expense you wrote down. The number “1” represents the expense that contributes most to your enjoyment of life, and subsequent numbers are increasingly less important.

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Now look at your top five or six highest ranked expenses (the most important ones). If you spent your money on these things ALONE, could you be happy?

Meaning, if you ditched all those other things on your list, would you still be ok?

What if, for one week, you put aside money to spend on just the top 20% of your list, and drastically cut back your spending (or eliminated entirely) the rest?

If you do this and find that your happiness suffers, you might need to re-prioritize your list. Most of us don’t really know what makes us truly happy until we don’t have it anymore. That’s ok. Try again.

But if you do this and find that you’re as happy as before (or happier) and discover that you didn’t really need all those other things as much as you thought you did… well, that’s a discovery worth celebrating!

Which expenses you decide to prioritize or de-prioritize depends entirely on you and what makes you happy. If that cup of Starbucks in the morning truly does make you happy, then so be it, spend money on it.

But in turn, maybe you could cancel your cable TV subscription or eat at home more often.

The goal is to spend on the few things that matter the most to you and save your money on the many things that don’t.

So what do you think? Will you give this a try? Comment below or share this post if you’re going to try this (or already do this)!

If you’d like to learn more methods like this, check out Charlie’s Debt Destroyer book book where he shares lessons learned from paying off $25,000 of debt in four months.

This is such a great concept! It is okay to spend money on yourself for things you really love, but if you are just spending money but don’t enjoy it as much then it is just silly! We love the idea of making a list of your top 5 or 6 most important expenses! We hope you had a great MLK weekend!

Charlie, I myself got out of debt some 12 years ago just in time to buy a bigger house when we had twins to up us to a family of 5. Had we not gone through the paydown after my wife returning to the workplace we would have been in no position to take advantage of the opportunity. It is amazing sometimes how things come together. I would love to narrate this title as an audiobook and split the royalties with you as there is likely a ton of money and exposure being left on the table but not having it there. Contact me if you are interested and I will do a sample read for you and we can go from there.

I love this, its a nice simple way for people to start saving money without any long winded spreadsheets or thinking too much. It also helps you figure out what makes you happy in life so you can focus on doing more of it.